Publication 971 - Innocent Spouse Relief - Internal Revenue Service (Page 9 of 24) in pdf

Avoid

Tax, earlier, under Separation of Liability Re-

not considered separation for this purpose. A tempo-

rary absence is one where it is reasonable to as-

lief.

sume that the absent spouse will return to the

7. You did not file or fail to file your return with the intent

household, and the household or a substantially

to commit fraud.

equivalent household is maintained in anticipation of

the absent spouse’s return.

8. The income tax liability from which you seek relief

must be attributable to an item of the spouse (or

•

Whether you would suffer a significant economic

former spouse) with whom you filed the joint return,

hardship if relief is not granted. (In other words, you

unless one of the following exceptions applies:

would not be able to pay your reasonable basic

living expenses.)

a. The item is attributable or partially attributable to

•

Whether you have a legal obligation under a divorce

you solely due to the operation of community

decree or agreement to pay the tax. This factor will

property law. If you meet this exception, that item

not weigh in favor of relief if you knew or had reason

will be considered attributable to your spouse (or

to know, when entering into the divorce decree or

former spouse) for purposes of equitable relief.

agreement, that your former spouse would not pay

b. If the item is titled in your name, the item is pre-

the income tax liability.

sumed to be attributable to you. However, you

•

Whether you received a significant benefit (beyond

can rebut this presumption based on the facts and

normal support) from the underpaid tax or item caus-

circumstances.

ing the understated tax. (For a definition of signifi-

c. You did not know, and had no reason to know,

cant benefit, see

Indications of Unfairness for

that funds intended for the payment of tax were

Innocent Spouse Relief

earlier.)

misappropriated by your spouse (or former

•

Whether you have made a good faith effort to com-

spouse) for his or her benefit. If you meet this

ply with federal income tax laws for the tax year for

exception, the IRS will consider granting equitable

which you are requesting relief or the following

relief although the underpaid tax may be attributa-

years.

ble in part or in full to your item, and only to the

•

Whether you knew or had reason to know about the

extent the funds intended for payment were taken

items causing the understated tax or that the tax

by your spouse (or former spouse).

would not be paid, as explained next.

d. You establish that you were the victim of spousal

abuse or domestic violence before signing the re-

Knowledge or reason to know. In the case of an un-

turn, and that, as a result of the prior abuse, you

derpaid tax, the IRS will consider whether you did not know

did not challenge the treatment of any items on

and had no reason to know that your spouse (or former

the return for fear of your spouse’s (or former

spouse) would not pay the income tax liability.

spouse’s) retaliation. If you meet this exception,

In the case of an income tax liability that arose from an

relief will be considered although the understated

understated tax, the IRS will consider whether you did not

tax or underpaid tax may be attributable in part or

know and had no reason to know of the item causing the

in full to your item.

understated tax. Reason to know of the item giving rise to

the understated tax will not be weighed more heavily than

other factors. Actual knowledge of the item giving rise to

Factors for Determining Whether To

the understated tax, however, is a strong factor weighing

Grant Equitable Relief

against relief. This strong factor may be overcome if the

factors in favor of equitable relief are particularly compel-

ling.

The IRS will consider all of the facts and circumstances in

order to determine whether it is unfair to hold you responsi-

Reason to know. In determining whether you had rea-

ble for the understated or underpaid tax. The following are

son to know, the IRS will consider your level of education,

examples of factors that the IRS will consider to determine

any deceit or evasiveness of your spouse (or former

whether to grant equitable relief. The IRS will consider all

spouse), your degree of involvement in the activity gener-

factors and weigh them appropriately.

ating the income tax liability, your involvement in business

and household financial matters, your business or financial

expertise, and any lavish or unusual expenditures com-

Relevant Factors

pared with past spending levels.

The following are examples of factors that may be relevant

Example. You and your spouse filed a joint 2009 return.

to whether the IRS will grant equitable relief.

That return showed you owed $10,000. You had $5,000 of

•

Whether you are separated (whether legally or not)

your own money and you took out a loan to pay the other

or divorced from your spouse. A temporary absence,

$5,000. You gave 2 checks for $5,000 each to your spouse

such as an absence due to imprisonment, illness,

to pay the $10,000 liability. Without telling you, your

business, vacation, military service, or education, is

spouse took the $5,000 loan and spent it on himself. You

Publication 971 (September 2011)

Page 9

Publication 971 - Innocent Spouse Relief - Internal Revenue Service Page 9

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